USD/JPY Forecast: Lifeless above 105.00, risk skewed to the downside

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USD/JPY Current price: 105.38

  • US Treasury yields surged on upbeat US data, providing support to USD/JPY.
  • The Japanese September Merchandise Trade Balance Total is expected at ¥989.8 B.
  • USD/JPY is technically neutral-to-bearish as long as below the 106.00 area.

The USD/JPY pair has settled around 105.40 for a third consecutive week, down in the last one amid prevalent risk aversion. An improvement in the risk-related sentiment kept the pair afloat on Friday, as better-than-expected US data pushed government bond yields higher. The yield on the benchmark 10-year Treasury note finished the week at 0.75%. Equities, on the other hand, closed the day mixed and around their opening levels.

Japan will publish this Monday the September Merchandise Trade Balance Total, foreseen at ¥989.8 B, up from the previous ¥248.6 B.  Exports in the mentioned month are seen down 2.4%, while imports are expected to have decreased by 21.4%.

USD/JPY short-term technical outlook

The USD/JPY pair is technically neutral-to-bearish, lacking clear directional strength. The daily chart shows that the price is stuck around a flat 20 DMA, although below the larger ones, which gain bearish traction. Technical indicators, in the meantime, head nowhere around their midlines. In the shorter-term, and according to the 4-hour chart, the pair is also neutral, as it settled above its 20 SMA but below the larger ones, all without directional momentum. Technical indicators in this last time-frame, hover around their midlines.

Support levels: 105.00 104.65 104.20

Resistance levels: 105.80 106.25 106.60

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